Canon Inc. · TSE:7751
Canon — Q2 2021 Earnings Presentation
27 slides from Canon's earnings presentation, Jul 28, 2021
Slide 1: Canon Inc. Second Quarter 2021 Results
Canon Canon Inc. Second Quarter 2021 Results July 28, 2021 Toshizo Tanaka Executive Vice President & CFO This presentation contains forward-looking statements with respect to future results, performance and achievements that are subject to risk and uncertainties and reflect management's views and as
Slide 2: Agenda
Canon Agenda @ 2Q 2021 Results P2-4 m@ FY 2021 Projection P5-8 m Details by Business P9-16 (2Q 2021 Results & FY 2021 Projection) @ Financial Situation P17-18 @ Sustainability Measures P19 m@ Excellent Global Corporation Plan Phase VI P20 @ Supplementary Information P21-26
Slide 3: 2Q 2021 Results overview
In the second quarter, despite seeing additional outbreaks of COVID-19 in certain countries and regions like Japan and Southeast Asia, the global economy as a whole followed a path of recovery. This is to some large extent thanks to accelerated efforts to get people vaccinated, especially in develop
Slide 4: 2Q 2021 results by business unit
In Printing, although our office business saw a slight delay in print volume recovery, sales of office hardware was basically in line with expectations. As for our consumer-oriented business, home demand remained solid. As a result, our Printing Business Unit posted sales and profit growth and a pro
Slide 5: 2Q operating profit changes
As for exchange rates, the yen’s depreciation had a positive impact of 17.0 billion yen on operating profit. As for changes in sales volume, the impact was positive on all business units, particularly Printing and Imaging, which were significantly impacted by COVID-19 last year. As for cost reductio
Slide 6: FY 2021 market outlook
The global economy, despite the recent spread of coronavirus variants, is expected to experience growth towards a full recovery, thanks to an accelerated pace of vaccination that will bring about increases in consumer spending and demand for capital goods, which were both down significantly last yea
Slide 7: FY 2021 projection
We now expect net sales to increase 13.9% to 3.6 trillion yen, operating profit to be 283.0 billion yen, 2.6 times higher, with significant improvement in our gross profit ratio and expense ratio, and net income to be 201.0 billion yen, 2.4 times higher.
Slide 8: FY 2021 projection by business unit
Next, the situation of each Business Unit. Following the outlook we released in April, we again raised our forecast for all four business units, particularly Printing and Imaging. As for Printing, given robust home demand for inkjet printers, and for Imaging, based on highly competitive full-frame m
Slide 9: FY 2021 operating profit factors
The impact of foreign exchange reflects yen’s depreciation. As for changes in sales volume, this reflects favorable sales conditions. As for price reduction, by making pricing decision based on the supply and demand balance, we expect an improvement of 16.2 billion yen. As for cost reduction, althou
Slide 10: Office MFD market and sales
As for the office MFD market, although market conditions weakened in Asia due to a rebound in COVID cases in the second quarter, the market for hardware and services in other regions tended to recover gradually. As a result, we expect the market to continue recovering in the second half of the year.
Slide 11: Prosumer products market and sales
As for the market for prosumer products, namely laser printers and inkjet printers, demand for home products remained strong, particularly in developed countries, thanks to working and learning from home. As for demand for office products, we expect a further recovery going forward as more people be
Slide 12: Production printing market and sales
As for the production market, in 2021, demand for printing posters and flyers increased in Europe and the United States due to the reopening of stores and various events. And in the second half of the year, we expect a further pick-up in economic activity and print volume. From this, we expect the m
Slide 13: Camera market and sales
Demand for cameras is growing steadily thanks to the strength of consumer spending in the United States and elsewhere, and the increasing number of people picking up cameras as a hobby and image expression as a new way of using time amid the COVID-19 pandemic. As a result, we raised our outlook for
Slide 14: Network camera market and sales
As we entered the second quarter, it became increasingly clear that the network camera market had returned to its original double-digit growth rate as orders and installations have been increasing along with the normalization of the economy. Under these market conditions, we steadily captured growth
Slide 15: Medical business
As for Medical in the second quarter, although the purchase of equipment utilizing government support funds eased, demand in Japan remained strong. In other regions, we continued to post solid sales of equipment for pneumonia testing. Additionally, in the United States and other countries where vacc
Slide 16: Semiconductor lithography equipment
In 2021, the semiconductor market is projected to be at an all-time high level in terms of value, thanks to growing demand for memory and logic chips used in datacenters, smartphones, and PCs, reflecting the spread of 5G and IoT. And also due to the expansion of demand for various devices, including
Slide 17: OLED panel equipment market
As for the OLED panel market, the proportion of products that incorporate OLED panels, such as smartphones and televisions, where demand is firm, is increasing. Due to this and their expanding use in other devices like laptops and handheld game consoles, we expect the market to continue to grow. Alt
Slide 18: Inventory
Inventory at the end of June was 589.1 billion yen, 6.8 billion yen lower than at the end of March. Finished goods inventory on a whole is considered to be at a low level, reflecting stronger than expected sales and other factors such as the halting of some production in Southeast Asia due to a rebo
Slide 19: Cash flow, debt and dividend
We raised our outlook for net income by 61.0 billion yen, and now expect operating cash flow to be around 430.0 billion yen, which shows that our ability to generate cash is steadily recovering. Assuming we make capital investment in line with our plan, we expect to secure 230.0 billion yen in free
Slide 20: Sustainability measures
Since last year, countries around the world have been announcing their intention to reduce CO2 emissions to net zero by 2050. Similarly, expectations for companies to resolve various environment and social issues, including the SDGs, have been increasing. Based on our corporate philosophy of kyosei,
Slide 21: Excellent Global Corporation Plan Phase VI
In the business environment that surrounds us, despite concerns about the spread of COVID- 19 variants, shortages of semiconductors, and other issues, our existing camera and laser printer businesses have begun to show signs of bottoming out from the shrinking market, and earnings are starting to st
Slide 22: Supplementary Information
Supplementary Information
Slide 23: FY 2021 Operating Profit Analysis
FY 2021 Operating Profit Analysis Canon (FY 2021 Current Projection versus FY 2020 Actual) (Billions of yen) +16.5 FX Details +182.9 +5.3 | Net Sales: +83.7 Cost of Sales: -16.3 ——) Op. Expenses: -28.9 -70.7 Change in Net Sales, excluding FX impact, for reference +38.5 Printing: +148.3 Imaging: +98.
Slide 24: Printing - Net Sales Growth Rate of Hardware & Non-hardware
Canon Printing - Net Sales Growth Rate of Hardware & Non-hardware FY 2021 FY 2020 Full Year 2Q Full Year Projection Actual Actual spy Hardware -38% -21% Non-hardware -40% -20% Office MFDs Lc Hardware -37% -20% Non-hardware -38% -20% JPY Hardware -31% -21% LPs Non-hardware -26% -19% ic Hardware 0% +1
Slide 25: Office MFDs - Net Sales Growth by Monochrome & Color
Canon Office MFDs - Net Sales Growth by Monochrome & Color F 2 FY 2020 2Q Full Year 2Q Full Year Actual Projection Actual Actual _ Monochrome -39% -22% Color -39% -19% Lc Monochrome -38% -22% Color -37% -19% Office/Prosumer - Net Sales by Product Catego (Billions of yen) FY 2020 1Q Full 1Q 2Q Full Y
Slide 26: Office MFDs/LPs - Color Ratio
Canon Office MFDs/LPs - Color Ratio FY 2021 FY 2020 2Q Full Year 2Q Full Year Actual Projection Actual Actual Net Sales 60%, 61% 58% 59% Omics MEDS Units 61% 60%) 59% 59% LPs Net Sales 53% 52% 52% 51% Units 17% 20%) 23% 21% Office MFDs/LPs - Unit Sales Growth by Monochrome & Color FY 2021 FY 2020 2Q
Slide 27: DILC Ratio & Digital Compact Camera (DCC) Units
DILC Ratio & Digital Compact Camera (DCC) Units Canon FY 2021 FY 2020 2Q Full Year 2Q Full Year Actual Projection Actual Actual DILC Ratio Net Sales * 89% 90%| 86% 87% Units 70% 71%| 66% 65% [ DCC Units (Millions) 0.31 1.25 0.26 1.48 * Net Sales Includes Interchangeable Lenses Semiconductor Lithogra